The rapid pace of disruption brings new risks and threats for organizations. It also requires them to find a different way of managing risk, one that acknowledges the role of trust as a competitive differentiator.
How organizations can transform the way in which they manage risk
So how can organizations transform the way in which they strategically manage risk across the enterprise, building-in trust by design?
1. Balance risks for competitive advantage
As a starting point, organizations should recognize the need to balance upside, downside and outside risks to achieve a competitive advantage. Historically, risk management functions have tended to focus on risk avoidance. Increasingly, however, they will be called on to help their organizations balance opportunities with threats, while also monitoring what’s going on externally to help address any issues that arise.
2. Embrace new digital thinking
It is also essential to instill the right risk mindset across the organization. This means embracing new digital thinking as well as involving a diversity of talent – especially in cybersecurity – to introduce a broad set of perspectives to the risk management process. This mindset needs to recognize that risk management is an enabler of trust and confidence, not just as an enabler of risk avoidance. It’s about flipping our thinking from, ‘what could go wrong?’ to ‘what has to go right’?
3. Embed risk management
Organizations need to embed risk management thinking into product and service design as well as into operations, so that they can accelerate their speed to market and innovate continuously while sustaining stakeholder trust along the way.
4. Digitalize risk function
It is vital to digitalize the risk function so that it has better access to higher value information in real time. This will enable dynamic decision-making that is aligned with the organization’s strategic objectives.
More and more large organizations are now recognizing the importance of trust and taking steps to address trust issues. At EY, we are launching our ‘Trust by Design’ service in response to our clients’ growing demands for advice on how they can embed trust as a design principle into their businesses. ‘Trust by Design’ will enable us to help clients become digitally confident and trusted enterprises that have the intelligence and insights to drive growth, increase business value and maintain stakeholder trust.
Risk and trust are inextricably intertwined. In fact, loss of trust is possibly the biggest risk that a business can ever face since everything else depends on it.
Every business should ask itself these questions:
- How does your strategy and operating model create the foundation for trust?
- How do you build and protect customer trust in your organization?
- Which trends are having the greatest impact on your organization and industry?
- What types of disruption are you seeing in your business (for example, implementing emerging technologies, new customer journeys and experiences, and alternative business models) and how have these trends impacted the way your organization manages risk?
- How have these trends and new disruptions impacted the way your organization manages risk?
- How integrated is the risk function with your company’s digital transformation projects?
- How do you envision the future of risk?
- What kind of disruption is needed in risk functions to deliver strategic value?
What’s possible in the Transformative Age? Join EY to discuss this and all the pressing economic and social issues as we look to the World Economic Forum Annual Meeting 2019 – from 22-25 January. Join the debate via ey.com/wef and using #WEF19 and #BetterWorkingWorld.
Fazit
Every organization today should be asking itself whether its approach to risk management is evolving as quickly as its surrounding environment. It should also be exploring how it can draw on the expertise of its risk function to design trust into all of its products, services and processes.
